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On Bond Ratings and Pension Obligations: A Note

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  • Martin, Linda J.
  • Henderson, Glenn V.

Abstract

Financial analysts have been intrigued by bond ratings since John Moody first started publishing them in 1909. Bond ratings are assigned by three agencies (Moody's, Standard and Poor's (S&P), and Fitch); these ratings are widely publicized and are, therefore, critically important. A bond's rating affects investors' purchase decisions and, consequently, the issuing firm's cost of debt and, indirectly, its cost of equity.

Suggested Citation

  • Martin, Linda J. & Henderson, Glenn V., 1983. "On Bond Ratings and Pension Obligations: A Note," Journal of Financial and Quantitative Analysis, Cambridge University Press, vol. 18(4), pages 463-470, December.
    • Handle: RePEc:cup:jfinqa:v:18:y:1983:i:04:p:463-470_02
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    Citations

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    Cited by:

    1. Hann, Rebecca N. & Heflin, Frank & Subramanayam, K.R., 2007. "Fair-value pension accounting," Journal of Accounting and Economics, Elsevier, vol. 44(3), pages 328-358, December.
    2. Takashi Obinata, 2002. "Concept and Relevance of Income," CIRJE F-Series CIRJE-F-171, CIRJE, Faculty of Economics, University of Tokyo.
    3. Edward M. Werner, 2011. "The value relevance of pension accounting information: evidence fromFortune200 firms," Review of Accounting and Finance, Emerald Group Publishing Limited, vol. 10(4), pages 427-458, November.
    4. Chen, Xuanjuan & Yao, Tong & Yu, Tong & Zhang, Ting, 2014. "Learning and incentive: A study on analyst response to pension underfunding," Journal of Banking & Finance, Elsevier, vol. 45(C), pages 26-42.
    5. Li, Zezeng & Kara, Alper, 2022. "Pension de-risking choice and firm risk: Traditional versus innovative strategies," International Review of Financial Analysis, Elsevier, vol. 81(C).
    6. F. Wang & Ting Zhang, 2014. "The effect of unfunded pension liabilities on corporate bond ratings, default risk, and recovery rate," Review of Quantitative Finance and Accounting, Springer, vol. 43(4), pages 781-802, November.
    7. Atanasova, Christina & Hrazdil, Karel, 2010. "Why do healthy firms freeze their defined-benefit pension plans?," Global Finance Journal, Elsevier, vol. 21(3), pages 293-303.
    8. Hulisi Ögüt & M. Mete Doganay & Nildag Basak Ceylan & Ramazan Aktas, 2012. "Predicting Bank Financial Strength Ratings in an Emerging Economy: The Case of Turkey," Working Papers 740, Economic Research Forum, revised 2012.
    9. Wallace N. Davidson III & Dipa Dutia, 1991. "Debt, Liquidity, and Profitability Problems in Small Firms," Entrepreneurship Theory and Practice, , vol. 16(1), pages 53-64, October.
    10. Öğüt, Hulisi & Doğanay, M. Mete & Ceylan, Nildağ Başak & Aktaş, Ramazan, 2012. "Prediction of bank financial strength ratings: The case of Turkey," Economic Modelling, Elsevier, vol. 29(3), pages 632-640.
    11. Webb, David C., 2004. "Sponsoring company finance and investment and defined benefit pension scheme deficits," LSE Research Online Documents on Economics 24699, London School of Economics and Political Science, LSE Library.
    12. Ragunathan V & Varma, Jayanth R., 1993. "When AAA Means B: The State of Credit Rating in India," IIMA Working Papers WP1993-09-01_01217, Indian Institute of Management Ahmedabad, Research and Publication Department.
    13. John A. Dove & Courtney A. Collins & Daniel J. Smith, 2018. "The impact of public pension board of trustee composition on state bond ratings," Economics of Governance, Springer, vol. 19(1), pages 51-73, February.
    14. Cooper, Russell W. & Ross, Thomas W., 2001. "Pensions: theories of underfunding," Labour Economics, Elsevier, vol. 8(6), pages 667-689, December.
    15. Kusano, Masaki, 2023. "Does recognition versus disclosure of pension liabilities affect credit ratings? Evidence from Japan," Journal of International Accounting, Auditing and Taxation, Elsevier, vol. 50(C).
    16. Heflin, Frank & Shaw, Kenneth W. & Wild, John J., 2011. "Credit ratings and disclosure channels," Research in Accounting Regulation, Elsevier, vol. 23(1), pages 20-33.
    17. Takashi Obinata, 2000. "Choice of Pension Discount Rate in Financial Accounting adn Stock Prices," CIRJE F-Series CIRJE-F-82, CIRJE, Faculty of Economics, University of Tokyo.

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